Local bank with no global service

A few years ago, you had to worry every time you travelled abroad. Did you possess foreign exchange? You tended to hoard forex for such eventualities. Credit cards, and debit cards, changed this. At best, you worried about the exchange rate you would get on pieces of plastic. The wheel has turned full circle and you need to worry again. At least, you need to worry if you bank with my bank.

This happens to be HSBC and I have banked with them since 1997. I also possess a Premier account, which entitles you to a personal relationship manager. HSBC prides itself on being the world’s local bank, which for my purposes, means that it doesn’t offer global services. Let me describe what transpired first. I was in Kuala Lumpur in September. Towards the end of the trip, I needed to pay. I have two credit cards, both issued by HSBC. Neither would work. I tried to use the HSBC debit card to withdraw money from an ATM machine. The debit card wouldn’t work either. Oddly, credit cards that belonged to my friends, and were issued by other Indian banks, did work.The embarrassment apart, I borrowed money from my friends and paid. On return, I tried to find out what had happened.

Let me keep the cock-and-bull story short. First, I was told there was a magnetic strip failure. That was a remarkable coincidence, magnetic strips on three cards failing simultaneously. Next, I was told the card-reader had a problem. That too was remarkable. HSBC cards were so advanced technologically that the card-reader couldn’t read them, but could read cards issued by other banks.

Finally, I was informally told HSBC has a policy of blocking cards if they are used in Malaysia. This is a normal security precaution and is designed to safeguard my own interests. In fairness, if this is a policy, customers should be told about this, so that they can figure out alternative means if they ever travel to Malaysia. No such communication ever came to me. In any event, HSBC advised me that if I ever decided to travel to Malaysia again, I should inform them in advance and the problem wouldn’t recur. I was back in Kuala Lumpur towards the end of November and through my relationship manager, informed the credit card department about the precise dates, even the flight numbers and the times of arrival and departure. Lo and behold! When it came to checking out of the hotel, the cards were blocked again.

The Premier account is sold to me with the tag-line that it will increase my wealth. Presumably, HSBC seeks to ensure this by ensuring that I do not spend. However, this time round, I was adequately prepared. I had cash. I had a forex card. I now gather that there are plenty of people who have had similar problems with cards issued by Indian banks, when travelling abroad. The experience differs from bank to bank, so all banks do not have a uniform policy. But if you are unlucky enough to be saddled with a bank that offers bad service, until you have changed your bank, you are back to the days of forex in cash and hoarding forex. Except that there is now this option of forex cards.

But this leads me to two other questions. There are plenty of magazines that rank banks. If you look at the indicators used, rarely does customer service and customer feedback in the rankings. Instead, the indicators are really refinements and embellishments on stuff we would have used to gauge success of bank nationalization. Perhaps I am being a trifle uncharitable. But the point about lack of customer service quality is a valid one. Second, we went through a flurry of competition in the banking sector. But that’s history now. This may not be the best of times globally.

But that apart, I think we do need another round of competition, to shake banks up and engineer shake-outs. Banks, including the private and foreign ones, have become too complacent. As for HSBC, it has been a long time since 1997. Divorce is not without its switching costs. But that seems to be the way to go.

DISCLAIMER : Views expressed above are the author's own.

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Author

Bibek Debroy is an economist, columnist and author. He has worked for the government, for an industry chamber and for academic (teaching and research) institutes. He is the author of several books, papers and popular articles. He is now a Professor at the Centre for Policy Research, Delhi

Bibek Debroy is an economist, columnist and author. He has worked for the government, for an industry chamber and for academic (teaching and research) insti. . .